Little Miss Sunbeam may be holding out her hand to welcome a handful of additional bread brands to the family of Flowers Foods, Inc. of Thomasville, Ga., if all goes according to plan.
Late Friday afternoon, Jan. 11, Flowers announced a $360 asset purchase agreement to acquire certain bread brands and bakeries of bankrupt Hostess Brands of Irving, Texas. Included in the bid are Wonder, Nature’s Pride, Merita, Home Pride and Butternut Breads, along with 20 baking facilities, and approximately 38 depots. A separate bid in the amount of $30 million was submitted for the purchase of the Beefsteak brand.
The acquisition of Hostess bread brands would establish Flowers as perhaps the lead bread supplier in the nation, with all the above labels as well as breads and buns marketed as Nature's Own, Whitewheat, Cobblestone Mill, Bunny Bread, Captain John Derst, and European Bakers. Some of the brands are under the Flowers banner through licensing and franchise agreements in specific areas of the country, and some are strictly regional brands, such as ButterKrust in San Antonio, Texas.
Flowers said it plans “to finance the transactions through a mix of available cash on hand and debt.” The Flowers announcement is also subject to regulatory clearance.
Sunbeam Bread is part of the Quality Bakers of America Cooperative, a group of wholesale U.S. bakeries who produce the 60-year-old brand of breads and rolls. Grupo Bimbo, the Mexican baking giant, also mentioned as a possible suitor for some of the Hostess brands, is also a baker of Sunbeam bread in other part of the country.
The offer now on the table by Flowers comes as no surprise. Even prior to the court-approved liquidation order on Nov. 29 of last year, the Georgia-based baker, second-largest in the nation, had been a prime contender to emerge with at least some defunct company’s brands and bakeries. Flowers made no secret of its interest, and CEO George E. Deese, has expressed the company’s intention to grow its market share to 75 percent of the population by 2016. Its current market area extends along the eastern seaboard from Maine to Florida, westward to the middle of the country, and across the south all the way to California. Currently, Flowers owns a total of 44 bakeries, and there are several in Texas.
Friday’s announcement ends the rampant speculation about who might become “stalking horse” bidders in the proceedings. Under a liquidation of this sort, a first offer is generally seen as “setting the bar” for any continuing negotiations, and is not a binding contract. In fact, stalking horse bids, in the case of the Hostess liquidation, will be reviewed in the Southern New York District Bankruptcy Court of Judge Robert Drain, and then an auction process will be initiated within “a few weeks,” which may bring additional competing offers, with perhaps higher prices and different terms.
A hearing to consider approval of bidding procedures is set for Jan. 25. Hostess has requested a Feb. 28 auction date and a March 5 court hearing to authorize the sale to the highest or otherwise best bidders, according to a Bloomberg report late Friday night.
“We also continue to negotiate with parties interested in purchasing our snack cake business and remaining bread brands and expect to select additional stalking horse bidders as soon as reasonably practicable,” Hostess CEO Gregory Rayburn said in a statement on Friday, as reported by DealBook of The New York Times.